“About 400 million will be used to offset part of our current loan portfolio of about N950 million while the remaining will be used to buoy working capital”

Omodele Adigun

After much delay in raising money to finance its key projects, May & Baker Nigeria Plc has finally hit its investors for equity funds. According to its Managing Director, Mr Nnamdi Okafor, the proceeds would serve the company in good stead to dominate the sub-Saharan Africa markets as the leading brand.

On how the proceeds of the offer would be utilized, Okafor explained that our current loan portfolio of the company, totaling about N950 would partly be offset.

Hear him: “Our plan is to invest the proceeds of the Rights issue to some key projects. For instance, over N400 million of the expected N2.45 billion will be used to finance part of our equity in Biovaccines Nigeria Limited, the joint venture company for local vaccine production. We are also going to invest over N500 million on capacity expansion for one of our cash cow products, paracetamol, for which we are building a dedicated plant.

“Marketing and brand building is expected to take over N500 million . Our new strategic focus since 2017 is to build an international brand within the sub Saharan Africa market, hence we adopted a new vision, to become a leading healthcare brand in Sub Saharan Africa. We shall pursue that ambition with vigor and plan to take deliberate steps to actualize this vision by building great brands, partnering with and possibly acquiring existing companies and brands in the sub-region.

“About 400 million will be used to offset part of our current loan portfolio of about N950 million while the remaining will be used to buoy working capital.”

Rights offer

We joined the stock market in 1994. As you are aware, it was at the 2014 AGM that our shareholders approved that we raise additional capital of N3.2 billion. Since then many of you have confronted us on why we are yet to come to the market. Each time such questions came up I have had to explain that we were waiting for the right time when the appetite in the market will support such move. Around the third Quarter of last year, the market showed signs of readiness for this offer. And so we began to plan to hit the market before the end of Quarter 2 of 2018. However, the 2019 election fever anticipated to hit by Quarter 4, 2018, caught the market much earlier; before the end of Quarter 1, 2018 and the market has remained bearish since then. However, the board, after due consultations with significant shareholders, decided we should continue with our move to the market.

Pedigree

We derive our confidence mainly from the pedigree, performance track records and strategic plans of the company which we believe should appeal to all discerning investors.

May & Baker is the first registered pharmaceutical company in Nigeria. It is the first to produce anti-malaria and anti-infective medicines in Nigeria, the first to market human vaccines in the country and the first to produce anti-retroviral drugs in the country. It is among the first set of companies to earn World Health Organisation (WHO) Good Manufacturing Practice (GMP) certification and now the first to invest in local vaccine production.

May & Baker is a company with bulging opportunities and great new potential. With a N3 billion authorised capital, only N450 million is paid up, May & Baker remains an investment haven for discerning investors.

A five-year financial summary shows that we have consistently grown revenue by over 10 percent since 2013. Similarly, the company has shown capacity to make profits in the last five years with pre-tax profit doubling in the last two years. Since 2014, it has also consistently paid dividends which increased by over 300 percent from six kobo in 2016 to 20 kobo in 2017 for every 50 kobo share.

Prospect

The company is making strategic investments which started over 12 years ago when we invested in the construction of anti-retroviral drugs in 2006. In 2011, we commissioned a WHO standard pharmaceutical manufacturing plant. That plant, which we call the Pharmacentre, was among the few certified by the WHO for current GMP in 2014. It has capacity to produce six billion tablets and 49 million bottles of 60ml liquid medicines annually. But, currently, the factory is running at a little below 60 percent capacity utilisation, leaving a large room for investment expansion.

We are also investing in key areas of healthcare where we have both comparative and competitive advantage. Top among which includes the joint venture with the Federal Government on local vaccine production. To us, that investment is a goldmine because of the huge opportunities that exist in the Nigerian vaccine market.

Recently, we signed a memorandum of understanding with both the Federal Ministry of Health and that of Science and Technology to commercialize some locally discovered medicaments. In the first one we shall commence the commercial production of an anti sickle cell drug discovered by the National Institute for Pharmaceutical Research and Development. This drug holds a large potential because of the enormity of the sickle cell challenge in the country. Similarly, we are working with the Federal Institute of Industrial Research in Oshodi to develop and commercialize a nutraceutical product.

While we are making these local inroads we have signed marketing agreements with foreign companies to market herb based medicines key to African disease profile and some of these products are already in the market and are doing well.

Our strategic goal is to become a preferred brand in Nigeria with the clear leadership of the market segments we deal in. We also want to become a regional healthcare powerhouse with strong and wide footprints in the sub Saharan market.

Projections

Our projections for the next five years, 2019 to 2023, is to achieve a quantum leap in both revenue and profits. We expect to hit N50 billion turnover by 2023. These projections have taken cognizance of the maturity of some of our new investments in vaccines, sickle cell drugs and herbal medicines.

Similarly our profit projections show that we shall sustain and improve on the current trend in pre and post tax profitability.

New funds

Our plan is to invest the proceeds of the Rights issue to some key projects. For instance, over N400 million of the expected N2.45 billion will be used to finance part of our equity in Biovaccines Nigeria Limited, the joint venture company for local vaccine production. We are also going to invest over N500 million on capacity expansion for one of our cash cow products, paracetamol, for which we are building a dedicated plant.

Marketing and brand building is expected to take over N500 million . Our new strategic focus since 2017 is to build an international brand within the sub Saharan Africa market, hence we adopted a new vision, to become a leading healthcare brand in Sub Saharan Africa. We shall pursue that ambition with vigor and plan to take deliberate steps to actualize this vision by building great brands, partnering with and possibly acquiring existing companies and brands in the sub-region.

About 400 million will be used to offset part of our current loan portfolio of about N950 million while the remaining will be used to buoy working capital.

Shareholders

What we are offering is a Rights Issue of 980 million new shares. This implies a ratio of one new share to one share currently held. The price for the new shares is N2.50 per share which we realise is slightly higher than the current price in the market. You can agree with me that the Nigerian Stock Market is currently bearish. This has not permitted the realistic pricing of equities on the exchange.

The offer which opened on October 22 is expected to close on November 28. Already Rights circulars and subscription forms have been dispatched directly to shareholders. However, the circulars and forms have also been made available with stock brokers.

I urge you to assist us to carry this message to encourage our shareholders to take up their rights because the harvest time is close. The new funds will be used to strengthen their investments and make the company more profitable. The impact of the proceeds of the rights will begin to manifest in 2019. As a matter of fact the new shares will benefit from the dividends from 2018 earnings.